Montreal’s Neuralitic Systems acquired by California-based Guavus

Neuralitic Systems acquired by Guavus

Call it a small-scale big data play as two startups in the world of analytics have announced they are combining forces.

Montreal’s Neuralitic Systems, which has raised $20-million in venture capital backing for its data-based marketing services for the telecom industry since its start in 2007, said Wednesday that it has been acquired by California-based big data analytics company Guavus.

Guavus itself has raised close to US$80-million in funding since it was founded in 2006.

Neuralitic now has 16 employees, with its headquarters in Montreal and a sales presence in the United States and Asia but founder Louis Brun said it was becoming difficult to keep up with growing demand with a small sales team.

He praised his existing investors but said it wasn’t easy to find another Canadian backer to lead the larger series C round the company needed.

“Already having $20-million — it’s something that is less natural in the Canadian market.”

So when he met Anukool Lakhina, the founder and CEO of 350-employee strong Guavus, last July, he said the two saw an opportunity.

“We were now at a stage where further significant funding was needed and at this point it made more sense to join forces with someone that was building that international sales force,” Mr. Brun said of Guavus, which is opening offices in Singapore and London, England and has an engineering facility in India.

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“With the addition of Neuralitic, Guavus now has a holistic data fabric that provides integrated decision-making across network, marketing and customer care, and enables the creation of data-driven business processes to deliver and optimize the right service at the right time,” Mr. Lakhina said Wednesday in a statement announcing the deal, which closed at the end of last year.

Neuralitic will operate as a Guavus company and eventually merge into one brand under the Guavus name, Mr. Brun said. The team will remain in Montreal, with plans to double in size and he will assume the role of senior vice-president for marketing and product strategy.

The companies, which did not disclose the financial terms of the deal, both offer data analytics for mobile carriers but their approaches are complementary rather than overlapping, which could lead to a stronger combined entity.

Neuralitic looks at the data use of mobile subscribers with a view to improving marketing opportunities for carriers to help with customer acquisition and retention.

San Mateo, Calif.-based Guavus, on the other hand, has expertise in optimizing network capacity and says it can increase carrier revenue through recommending new services and a better subscriber experience.

Mr. Brun said that in the early years of mobile phone use, it was fairly simple for carriers to track use of voice functions like caller ID or call waiting and make decisions on how best to market and package those services.

“Data was a much more complex environment with all the services and the different devices that would impact the networks in different ways that we’d seen before,” he said. “We came up with the idea of providing [carriers] with a view and a true understanding of what’s going on on their network from the data side, to help them better plan and market their services.”

Neuralitic got some early funding from Business Development Bank of Canada (BDC) and was able to secure some patents and prove its concept.

By September 2008, it landed a second round of $7-million in funding led by Vertex Venture Capital with BDC and GO Capital LP participating and a few months later, BlackBerry Partners Fund (now known as Relay Ventures) topped that up with an additional $3-million.

Neuralitic picked up a few clients including one Canadian carrier and two in Asia and by January 2011 it raised a further $8-million in a round led by Export Development Canada with participation from its existing investors.